You have to backtest your trading system and actually, trade it! Simulation does not count. I had like 5 straight losing trades this past December and stopped trading for 1 week. Reviewed my trading journal and found I was reading the stockcharts wrong. Made adjustments since, then. After that, I have 5 winning trades and 3 losing trades and doing way better. Without a trading journal, I probably, would not have figured out my mistake.
Demoralized. Is 14 losses in a row normal?
- Thread starter Risepoint1879
- Start date
You have to backtest your trading system and actually, trade it! Simulation does not count. I had like 5 straight losing trades this past December and stopped trading for 1 week. Reviewed my trading journal and found I was reading the stockcharts wrong. Made adjustments since, then. After that, I have 5 winning trades and 3 losing trades and doing way better. Without a trading journal, I probably, would not have figured out my mistake.
I have lost twice 23 losing trades in a row, once long term in 1993 & lost approx $4800, then 24th trade was in coffee and made it all up and then some. In 2009 scalping, I lost 23 in a row, I was doing 150-200 trades a day. Both times I started laughing somewhere in middle of them knowing it was unusual event and started to drop size quickly in scalping waiting it out, both were well backtested and changed nothing. "We" cycle, systems cycle, losses will go way beyond how we test them, I fully expect one day to beat the worst in a row no matter what the changes one may do. Losses do make one think if there are ways to improve what we do. It is bother some as it leans on us of thinking if we did something wrong, but for me just flukes in cycling.
How come we always think of bad times in trading first and yet we seldom think of the bold times? After a number of years though, you just don't think about anything, part of the game.
You can use a parabolic on your equity curve and when touched, reduce size.
How come we always think of bad times in trading first and yet we seldom think of the bold times? After a number of years though, you just don't think about anything, part of the game.
You can use a parabolic on your equity curve and when touched, reduce size.
I didn't fully understand your table but I do understand the stats behind the probability of N consecutive losers with an assumed winning percentage. It is far higher than most newbies would ever guess. This is why most systematic traders end up failing. It's very hard to put on the 15th trade after 14 consecutive losers. So you begin to add discretion to taking signals, which of course mean you miss that huge winner that would have bailed out the 14 losers.
Personally, I would have trouble trading a system that generated 60 % losers, but those are actually good results for most trend following or vol break out type systems.
The OP didn't mention what he is trading, but I will add my ritual disclaimer that newbies should not be trading so many times a day. At least he is not scalping.
Hello Risepoint1879,
Have there been any market conditions changes over the past 3 days for the stocks or future markets that you trade? Big bars, tight trading ranges, high spikes, etc.
I believe this is just drawdown for the 3 days.
Your win ratio is only 42% which means that you lose more than half of the time. That 14 losing trades might be that 58% of the time albeit they are all in a row. But what is more important is your profit/loss value when you do profit. How much do you risk on your $29K account on each trade? Just $460? Do you adjust it for your $29K account or do you still use the $460 risk amount which is 1.58% of your account? If you use the $460 risk amount for each trade which is 1.58% of your account, with your win ratio of 42%, even with your winning reward amount, your profit amount on average is only $319. Where do you get the $6K per month?
One very important question and I don't know if it's already been asked then answered is, were the trades all in the same direction?
If they were all in the same direction, obviously the market just happens to be moving against you. If you were playing both longs and shorts, then I'd question your system, even though it could just be a bad run.
If they were all in the same direction, obviously the market just happens to be moving against you. If you were playing both longs and shorts, then I'd question your system, even though it could just be a bad run.
The market is designed to frustrate even the best traders.
Open a new account? Start a new system? Install new software or hardware?
Just then it will kick your ass. It's part of the game.
At the inspiration of the guy who posted the chart above, I ran your numbers in this handy Monte Carlo spreadsheet I have.
You state that 22% are 2.7R winners, and 20% are 0.5R. This gives an average of 1.6R at your 42% win rate. It might not be super accurate, but good enough I think. So if I use the numbers of a 42% win rate at 1.6 (so $160 won vs. $100 lost), we come to this table below.
I ran it several times, and on this particular time, it actually hit a loss streak of 12 for the current simulation, which is close to your 14. But when you look at the chart that lists Max, Average and Min, the loss streak went as low as 21!
Essentially, your numbers are perfectly in line with what can happen based on your win percentage.